Tuesday, September 22, 2020

ABC targets mining houses to improve its fortunes

African Development Corporation (ABC), the African wholesale bank, is embarking on re-capitalisation process aimed at helping it to take advantage of the booming mining activities in the region.

The bank has recently entered into a US 20 million (P120 million) tri-transaction involving two other parties, African Development Bank and National Development Bank of Botswana.

Chief Executive Officer of ABC, Douglas Munatsi, told analysts on Tuesday that the bank is aggressively looking at raising its self imposed limit of its individual branches from about US 10 million to about US 14 million.

“We are taking a lot of dollar liabilities and would match it with dollar assets with the view of taking advantage of the developments in mining,” he said.

Buoyant international commodities market has raised appetite in mining activities in Africa- -especially southern Africa ÔÇô and the company is likely to benefit from activities around copper mining.

The re-capitalisation will enable exploration and stable mining companies across the region to tap into it and, on average, are looking for loans at around US 5 million.

It has operations in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe.

The move comes a week after the bank announced impressive headline earnings at P 47 million or 73 percent for the half year. It also managed to slash its income cost ratio from 60 percent to 49 percent ÔÇô an impressive figure by all standardsÔÇöand it is hoping to prune it further to 40 percent in the next two-to-three years.

Munatsi strongly believes that they will join their peers by coming out strongly in the second half of the year, after the fall of the preferential shares due next month and the propping-up of ABC Tanzania to the tune of US $ 4 million.

The sentiments are also under pinned by the fact that ABC Botswana, Mozambique and Zambia are scheduled to exceed their estimated earnings for this year- given experiences of the first half.

He said, given the situation, they are most likely to declare their first ever dividend since its listing on the Botswana Stock Exchange at the beginning of the century.

“The net interest income improved in Botswana, Mozambique, Tanzania and Zambia operations but Zimbabwe suffered from the effects of inflation and the depreciation of the Zimbabwe dollar.

“Earnings from Zimbabwe, in spite of difficulties, did improve due to strong performance of trading portfolio,” the bank said, adding that the operations were blighted by the losses at the microfinance at Zambia operations.

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Digital edition of The Telegraph, September 23, 2020.